In a rare show of consensus for constituencies often at odds, a group of affordable housing advocates and home builders are pushing the city of San Jose to retool how it intends to produce below-market-rate homes in Coyote Valley.
If the city does not adopt more flexible positions for the 3,500-acre region, they warn, it runs the risk of creating only housing affordable to moderate-income families and excluding the region's poorest. That would undermine the city's stated goals of having a truly diverse Coyote Valley community that is as self-contained as possible.
City housing staff is giving limited indication that it is willing to adopt policies unique to the south-county region, however, saying they lack the management bandwidth to oversee different programs for different parts of the city.
At the same time, some affordable housing advocates say the city should not shoulder any of the expense of putting up the 5,000 affordable homes proposed for Coyote Valley. Instead, they say the area's housing developers should assume the entire expense, including the cost of building 2,900 apartments and 100 for-sale homes for the region's poorest residents.
That standard exists no where else in San Jose, says Housing Department Director Leslye Krutko. "I do not know if it is financially feasible," she says.
Such units require deep subsidies that could reach as much as $298,000 an apartment for the lowest-income residents, according to an estimate prepared for the city by a Berkeley economist. Conceivably, the housing developers could defray some of that cost with money from sources other than the city, such as the state and federal governments.
Whatever that outcome, the burden would be on top of an estimated $1.5 billion in infrastructure costs that Coyote Valley property owners already face. The bulk of the $1.5 billion, up to as much as $1 million an acre, is slated to come from home builders, and ultimately market-rate home buyers. Industrial property owners and developers are not expected to bear any of the cost of the affordable housing.
"Affordable housing is definitely a huge cost for this project," says Kerry Williams, president of the Coyote Housing Group, a partnership of Coyote Valley property owners including some home builders. The group is financing the Coyote planning effort, which so far has cost $13 million.
The San Jose City Council has said only that it wants at least 20 percent of the 25,000 homes built in Coyote Valley to be "affordable." But council members have not defined "affordability" with precision. Housing for the lowest-income families requires greater subsidies than for those at higher income levels.
Affordable housing is a long-term issue in SIlicon Valley. The region's global economic competitiveness suffers because people working in the area spend so much of their pay on housing or so much of their time commuting to less-expensive shelter in outlying areas.
A goal for Coyote Valley is to put homes near industry and shopping, allowing people to walk, ride a bike or take public transportation regularly. Without enough housing affordable to all income levels, the fear is that the area will contribute to, rather than reduce, congestion on local freeways and air pollution.
"I was pretty flummoxed," says Stephanie Schaaf, a public education and advocacy official with San Jose nonprofit housing provider EHC LifeBuilders, of the city staff's resistance to adopting new affordable housing methods for Coyote Valley. "It was really inspiring to have folks from the privates and nonprofits come to some agreements on goals and targets, and everyone was taken a bit off guard" that staff did not embrace the momentum more fully.
Complicating matters are the city's internal financial problems. By year's end, the city projects that it will have produced 10,000 new affordable homes in San Jose in the last eight years in addition to other work such as helping families rehabilitate existing homes.
But city money to subsidize housing is running low and, given projections of property tax revenue, the production of new homes is expected to fall considerably in the years from now until 2010. According to documents filed by the city with the federal government last year, in the next five years the city expects to build and rehabilitate fewer than 6,000 affordable homes. That's roughly 10 percent of projected need based on federal definitions that stipulate that people should be spending no more than 30 percent of their incomes on housing.
Those realities, says long-time affordable housing advocate Saul Wachter, treasurer of the Affordable Housing Network of Santa Clara County, mean Coyote Valley should be forced to bear its own housing costs internally. Beyond that, he and other affordable housing advocates say, the city must turn its focus to providing housing for the area's poorest people, who earn less than $32,000 a year to support a family of four and whose needs are among the most unmet in the region.
"Our position is that (affordable) housing has to be built in Coyote Valley without city money because the city doesn't even have enough money for housing that is needed in the city as it currently is," Mr. Wachter says. "We think developers can take a portion of the money that they are going to earn on their higher-value homes and along with land donation provide homes for extremely low-income families."
Discussions on affordable housing in Coyote Valley are continuing and no final decision is expected for months.
SHARON SIMONSON covers real estate for the Business Journal. Reach her at (408) 299-1853.
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